Mario Bros. is the biggest franchise of all time. Bigger than Star Wars, Marvel… bigger than Harry Potter. Nintendo is an empire.

Dave Young:

Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

[Travis Crawford Ad]

Dave Young:

Welcome back to the Empire Builders Podcast. Dave Young here with you, and Stephen Semple’s alongside, with another empire-building story for us that-

Stephen Semple:

An exciting story.

Dave Young:

It’ll take you back to childhood, but it doesn’t take me back to childhood because I’m too goddamned old.

Stephen Semple:

Well, it depends how you look at this, this might be-

Dave Young:

No, I suppose. I suppose the company [inaudible 00:01:55].

Stephen Semple:

It might be older than your childhood, but depends what we decide to talk about.

Dave Young:

Yeah, it’s just like when the big games came out, the… So we’re talking about Nintendo today.

Stephen Semple:

Correct. Correct.

Dave Young:

And I had Atari and things like that. And my kids all had the Nintendo. I actually have a Nintendo Switch, but I didn’t get that until I was…

Stephen Semple:

It also originally started as an arcade game, if we go back, because we are going to go back far enough.

Dave Young:

Well, that’s true. That’s true.

Stephen Semple:

Yes, yes. But if we actually went back to the company, Nintendo, we would be going back to 1889.

Dave Young:

Okay. So not so much my childhood. There you go.

Stephen Semple:

1889. Yeah. And we’re really not going to talk so much about the origin and Nintendo as a company, but really, the origin of the video game business, and more specifically Donkey Kong, and went on later to become the Mario Brothers franchise. That’s really what we’re going to talk about.

Dave Young:

Now, hold on. Hold on. Hold on. Now, I don’t know everything, but I’m pretty sure video wasn’t around in 1889.

Stephen Semple:

It was not.

Dave Young:

There was no video games.

Stephen Semple:

No, there was not. So that’s why we’re really going to be talking about more of the recent history of Nintendo.

Dave Young:

A real Donkey Kong, climbing ladders and throwing barrels.

Stephen Semple:

Okay. That’s it. That’s it.

Dave Young:

Or a monkey, a gorilla. Yeah.

Stephen Semple:

And here’s the thing, the Mario Brothers franchise is huge. It’s one of the biggest franchises in history. There’s been 800 million video games sold worldwide, making it the bestselling video game of all time. It’s bigger than Pokemon in game sales alone. The estimated lifetime sales across all revenues for the Mario Brothers franchise is $60 billion. Bigger than Star Wars, bigger than Harry Potter, bigger than Marvel.

Dave Young:

Wow.

Stephen Semple:

The movies alone sold over a billion dollars. There’s theme park now. It’s huge. It’s absolutely massive. And the Nintendo company is very old. It was founded back in Kyoto, Japan in 1889 by Fusajiro Yamauchi. That’s it, Yamauchi.

Dave Young:

Oh.

Stephen Semple:

Boy, I’m going to struggle with these names.

Dave Young:

What were they doing back then? What was the company doing?

Stephen Semple:

The first product they did was a playing card called Hanafuda, and it was very, very successful. So they actually started-

Dave Young:

As a gaming company.

Stephen Semple:

… in game business doing playing cards.

Dave Young:

Okay.

Stephen Semple:

Now, during the 1950s, during Japan’s economic recovery, because if you remember, the economy was decimated in World War II, and through the Marshall Plan and whatnot, there was this rebuild going on. And during that time, they had a new leader, Hiroshi Yamauchi, who decided to explore all sorts of new businesses. He was doing all sorts of stuff. They had taxis, they had love hotels. Yes, you heard it right, love hotels.

Dave Young:

Love hotels.

Stephen Semple:

Instant rice, and of course, toys. And most of the things they did failed, except toys held a promise, so they continued to lean into toys. So it’s April 1978, so this is basically really where our story starts, and Taito, a competitor, releases a game called Space Invaders.

Dave Young:

Oh, right. I remember Space Invaders. Sure.

Stephen Semple:

Remember Space Invaders? And of course, this is back in the day of arcades, and you’re putting money into the games. This is so big in Japan, there’s 100 yen shortage. It would be like being in the U.S., and we run out of quarters.

Dave Young:

Right.

Stephen Semple:

It’s so big. So Nintendo, because it’s having some success in the game space, decides to make a knockoff of Space Invaders. So it’s October 1980, they create this knockoff called Radar Scope, and they decide also to ship it to the U.S., because they’ve started up a U.S. division. And it takes four months for the game to travel from Japan to the United States, and once it arrives, the trend has changed, it’s no longer Space Invaders, it’s now Pac-Man is the big game.

Dave Young:

Okay.

Stephen Semple:

So they’re left with these 2,000 unsold cabinets sitting in the United States. Enter Shigeru Miyamoto, who’s a graphic designer with Nintendo, and he has an idea, and he says to them, “Look, let’s reuse the cabinets, and let’s just create a new game. Let’s do that.” And it’s like, “What the heck? Let’s give this a try.” So Shigeru grew up in rural Japan, and this deeply influenced how he looked at games, because he grew up in a place where there was no television, none of these things, and he would go and he would play in like a cave that was nearby, and he would create all of these stories and characters. And this is the ’80s where the games do not have characters or a story.

Dave Young:

Okay. Yeah.

Stephen Semple:

They didn’t have that.

Dave Young:

Space Invader, you’re just knocking down…

Stephen Semple:

Right. Pac-Man, the same thing, there was no story. Pong, all that stuff, no stories. He takes a look around and he realizes that Nintendo has the rights to use Popeye, so Shigeru makes a suggestion to create a game using Popeye, where they already have the rights, and he moves ahead and does that. And so he also decides to make a game where characters move up rather than scrolling left to right, and there’d be different levels, which was also a relatively new idea. And he created this whole thing where they could jump, and using just a joystick in the buttons that already existed. So they started to create this game, but they hit a snag. Just before the release, they discovered Nintendo only had the rights to use Popeye for playing cards.

Dave Young:

For playing cards. Darn it.

Stephen Semple:

Now, turns out this was a gift from heaven, and the best thing that could ever happen in Nintendo.

Dave Young:

So it would’ve been Bluto up at the top, and Popeye trying to get up there, climbing the ladders and-

Stephen Semple:

And saving-

Dave Young:

So sort of a nautical theme?

Stephen Semple:

And saving olive oil.

Dave Young:

Yeah.

Stephen Semple:

Because remember, he would always capture olive oil.

Dave Young:

Yeah.

Stephen Semple:

And Popeye was this love triangle, right?

Dave Young:

Yeah.

Stephen Semple:

So what does Shigeru do? Replaces-

Dave Young:

Bluto becomes-

Stephen Semple:

… with-

Dave Young:

… the gorilla.

Stephen Semple:

Right. Popeye becomes Mario.

Dave Young:

Yeah.

Stephen Semple:

And olive oil is Princess Peach.

Dave Young:

Okay.

Stephen Semple:

It’s the same story.

Dave Young:

Yeah. Beautiful.

Stephen Semple:

It’s exactly the same story. And if you think about it, even the whole idea of this gorilla capturing the princess kind of sounds like King Kong, doesn’t it?

Dave Young:

A little bit. Sure.

Stephen Semple:

A little bit. And of course, they can’t use the name King Kong, so it’s Donkey Kong. And the reason why Donkey Kong is, he went looking through English dictionaries, and there’s all this stubbornness, and all this other things that go along with it. So we went, “You know what? This monkey, this Kong is kind of stubborn.” So Donkey Kong is the name of the game.

Dave Young:

Did they run into any issues with the King Kong folks?

Stephen Semple:

Nope.

Dave Young:

No?

Stephen Semple:

No, because you think about it, it’s a completely different name, Donkey Kong, right?

Dave Young:

Yeah, but it’s still a big gorilla with the word Kong in it.

Stephen Semple:

Yeah. Nope, no. It was different enough.

Dave Young:

[inaudible 00:09:14] just because it’s stubborn, and it sort of went with the word Kong?

Stephen Semple:

Yep. So it was different enough. It was all great. And the original character was not Mario.

Dave Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

[Using Stories To Sell Ad]

Let’s pick up our story where we left off, and trust me, you haven’t missed a thing.

Stephen Semple:

And the original character was not Mario. The original character was Jumpman. Jumpman.

Dave Young:

I kind of remember that.

Stephen Semple:

Jumpman. And the game allowed them to reuse the cabinets, and just do it. And think about it, the objective of this, because he was also just a very junior graphic designer, and the objective on this was, “Hey, if we can sell these 2,000 unsold cabinets sitting in the U.S., that’ll take the financial strain off of our U.S. operations, and it will be great, it will keep them afloat.” And here’s what happened, they sold in 1981 alone 60,000 cabinets.

Dave Young:

I tell you, I poured a lot of money into one of those cabinets when I was in college.

Stephen Semple:

So Shigeru goes from this low-level designer to the creator of one of the best performing games up to that point. And one of the things that also ends up happening, he starts making modifications to the game. And one of the modifications is, he’s walking one day, and he sees these pipes, and he realizes character should be a plumber, and the landlord for one of the Nintendo properties’ name was Mario.

Dave Young:

Okay.

Stephen Semple:

So that’s where the whole idea of Mario came from, and eventually evolved to being brothers, Mario and Luigi. And of course, there was continuing success, and other formats and differing games. And Mario Brothers grew beyond Donkey Kong, it went from Donkey Kong to really the franchise being the Mario Brothers, with all sorts of new characters being added, and all sorts of new themes, like there’s go-kart racing and all sorts of different things. But the birth of the idea happened when they had this problem of, “We’ve got to have these cabinets…” And Shigeru saying-

Dave Young:

“And we either have to make a whole bunch of Popeye playing cards, or we have to find something to put in these cabinets.”

Stephen Semple:

“We have to find something to put in these cabinets.” And Shigeru saying, “It needs to be a story.”

Dave Young:

Yeah. No, that’s brilliant. And I feel like I’d be remiss if I didn’t point out to our listeners here in the U.S. that Steve is Canadian, and he pronounces it Mario, and everybody I’ve ever met says Mario.

Stephen Semple:

Mario.

Dave Young:

Mario. It’s Mario Brothers.

Stephen Semple:

Mario.

Dave Young:

It’s sort of like you say Mazda, we say Mazda.

Stephen Semple:

Right. Yes. Yes.

Dave Young:

So-

Stephen Semple:

Yeah, that’s true.

Dave Young:

Here’s a weird tangential thought. Do you have a minute for one of my weird tangential thoughts?

Stephen Semple:

Isn’t that why we’re here? Just for your weird tangential… Isn’t what we tune in for?

Dave Young:

That’s the way I look at it. I wonder if the guy that shot the UnitedHealthcare… Luigi, I wonder if there was a little bump in Nintendo stock.

Stephen Semple:

Oh, I wonder.

Dave Young:

And I wonder too, what was the discussion inside Nintendo about that? At first it was probably, “Oh my God, a guy named Luigi just shot someone.” And that was probably, “Oh my God, a guy named Luigi just shot someone that… Okay.” It’s not cut and dry.

Stephen Semple:

Well, it isn’t, because sometimes these negative events actually have positive impacts on sales. The one that I always remember that always comes to mind, I always find bizarre, is the white two-door Ford Bronco was due to be discontinued until O.J. Simpson went and did a joyride on LA freeways, and it actually extended the sales of that vehicle several years. And to this day, the white two-door Ford Bronco is a premium price from that year.

Dave Young:

Yeah-

Stephen Semple:

It’s nuts. Sometimes these crazy things happen.

Dave Young:

I don’t know if it was a joyride, but yeah. But we remember it, for sure.

Stephen Semple:

But we remember it. But-

Dave Young:

And those things have these impacts that you couldn’t buy that. There’s nothing Ford Motor Company could do that would’ve done that, that would’ve saved the Bronco.

Stephen Semple:

So here’s the interesting thing, coming back to Nintendo, that I find… So one of the influences it had was it was the first game that came along and basically said, “We should have a story.” And if we take a look at video games today, they’re all very heavy story based. And in fact, the stories are unbelievably rich, like Zelda, and all these other ones are these very complex universes that have been created. And he was kind of the first to come along, and his influence from that came from the fact that he didn’t grow up with these things.

Dave Young:

Yeah, he grew up with stories.

Stephen Semple:

So again, it’s this whole outside… We had this graphic designer that didn’t grow up with these things saying to a game, “Here’s what it should do. It should have this story, and there should be this imagination.” And all these things. And when you think about it, there was a couple of accidents, a couple of lucky happenstances that led to the birth of this. First of all, the console. Because if you think about it, if it was the creating of a brand new game, you wouldn’t take some junior graphic artist and put on it. The objective was, “All we need to do is move these 2,000 consoles.” So it was like, “Okay, so we’ll give it to the junior guy to do.” And then it blows out of the water. The other lucky happenstance is, think about how Nintendo’s fortunes would be completely different if they actually had the rights to use Popeye.

Dave Young:

Yeah, it would have been, like, Mario Brothers, that whole universe would never have come about, and-

Stephen Semple:

Well, the whole universe would be Popeye Universe, even if it worked.

Dave Young:

And I can’t see that happening.

Stephen Semple:

Right. But even if it worked, it would not have been theirs, it would have been-

Dave Young:

Oh, true.

Stephen Semple:

The people who would have made all the money were the owners of the Popeye license, would have been a licensee.

Dave Young:

Yeah, that’s true.

Stephen Semple:

So they had a couple of really lucky, fortunate things that happened that totally changed the trajectory of Nintendo. But here’s the other interesting lesson, and look, we talk about this all the time in storytelling, is there’s a couple of things you can do in storytelling. One is, you can take an existing story and just change the characters. We just took Popeye, changed as Donkey Kong. And what you know is, we knew that story worked, so it’ll work over here with different characters. Or what you can do is, you can take existing characters, and you can change the setting. In magical worlds, you’re always talking about how Sherlock Holmes, and-

Dave Young:

House M.D.

Stephen Semple:

… House M.D. is the same story.

Dave Young:

Sure.

Stephen Semple:

It’s just one is a detective during Elizabethan times, and the other one is an emergency room doctor in modern times. Same character, different setting, changes the story.

Dave Young:

Right.

Stephen Semple:

So when you’re looking to use stories, find ones that work, and do that.

Dave Young:

Find the popular stories and just take the framework. And I’ll give you another example-

Stephen Semple:

Right. Either change the characters, make it same story with different characters, or take the characters and put them in a different setting.

Dave Young:

… there’s a book called the Bible that had this story about this Jesus fella.

Stephen Semple:

I think it’s rather a relatively popular book.

Dave Young:

And then in 1605, a guy named Miguel Cervantes wrote a book called Don Quixote, and he took a lot of the storylines and metaphors from this story in the Bible and created a book that became the second bestselling book of all time right after the Bible. Then a guy named John Steinbeck took a lot of the stories from Don Quixote, and renamed characters, and put them in different situations, but took the structures of the stories, and… So this works. Just do this.

Stephen Semple:

Oh, yeah.

Dave Young:

Just find a story you like-

Stephen Semple:

Absolutely.

Dave Young:

… and take the [inaudible 00:17:59].

Stephen Semple:

Reimagine it. Reimagine it. Reimagine it. Either change it, keep the same story and change characters, or take the characters and put them in a new setting.

Dave Young:

I mean, the cool thing is, you can’t copyright a story arc, right?

Stephen Semple:

No, no.

Dave Young:

Something bad happens to someone and they overcome it. “Okay, no, that’s mine.”

Stephen Semple:

I’m still waiting for the overcome part.

Dave Young:

Yeah. Right?

Stephen Semple:

Yeah.

Dave Young:

That’s still the part of the story. Oh, I love it.

Stephen Semple:

I just found these things that came together for the creating of the Mario Brothers to be really interesting. And it’s also interesting when you consider who was expected to be the star of the show was the donkey, and it ended up becoming the Mario Brothers.

Dave Young:

Yeah. Great story. And I see it. Thank you for switching to English. American English. I’m sorry.

Stephen Semple:

American.

Dave Young:

[inaudible 00:18:54].

Stephen Semple:

All right. Thanks, David.

Dave Young:

Where can we go play some Donkey Kong next time?

Stephen Semple:

Well-

Dave Young:

Anybody got an old Donkey Kong console?

Stephen Semple:

Yeah. You know what? My kids have got some old play stuff, I’ll bring it down.

Dave Young:

No, I want the console. I want the big-

Stephen Semple:

Oh, you want that… Well, I think we may have to look hard for that.

Dave Young:

Yeah, that’s good. Well, keep your eyes out.

Stephen Semple:

I will.

Dave Young:

Thanks for the story of Nintendo, Stephen.

Stephen Semple:

All right. Thanks, David.

Dave Young:

Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app, and leave us a big, fat, juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire-building session, you can do it at empirebuildingprogram.com.